MICROSOFT CORP. v. AT&T CORP.
No. 05-1056
Supreme Court of the United States
Argued February 21, 2007—Decided April 30, 2007
550 U.S. 437
GINSBURG, J., delivered the opinion of the Court, except as to footnote 14. SCALIA, KENNEDY, and SOUTER, JJ., joined that opinion in full. ALITO, J., filed an opinion concurring as to all but footnote 14, in which THOMAS and BREYER, JJ., joined, post, p. 459. STEVENS, J., filed a dissenting opinion, post, p. 462. ROBERTS, C. J., took no part in the consideration or decision of the case.
Theodore B. Olson argued the cause for petitioner. With him on the briefs were Miguel A. Estrada, Mark A. Perry, Matthew D. McGill, Amir C. Tayrani, T. Andrew Culbert, and Dale M. Heist.
Daryl Joseffer argued the cause for the United States as amicus curiae urging reversal. With him on the brief were Solicitor General Clement, Assistant Attorney General Keisler, Deputy Solicitor General Hungar, John J. Sullivan, Joan Bernott Maginnis, John M. Whealan, Thomas W. Krause, and Heather F. Auyang.
Seth P. Waxman argued the cause for respondent. With him on the brief were William G. McElwain, Jonathan E. Nuechterlein, and Mark C. Fleming.*
*Briefs of amici curiae urging reversal were filed for Amazon.com, Inc., et al. by Jeffrey S. Love and John D. Vandenberg; for Autodesk, Inc., by John Dragseth and Frank E. Scherkenbach; for the Business Software Alliance by Viet D. Dinh; for Eli Lilly and Co. by Robert A. Armitage and James J. Kelley; for Intel Corp. by Joel W. Nomkin, Jonathan M. James, Dan L. Bagatell, Stefani E. Shanberg, Steven R. Rodgers, and Tina M. Chappell; for Intellectual Property Professors by John F. Duffy, Mark Lemley, and William H. Neukom; for Shell Oil Co. by Richard L. Stanley and John D. Norris; for the Software Freedom Law Center by Eben Moglen and Richard Fontana; for the Software & Information Industry Association by Gregory S. Coleman, Amber H. Rovner, and Edward R. Reines; and for Yahoo! Inc. by Christopher J. Wright, Timothy J. Simeone, Joseph K. Siino, and Lisa G. McFall.
Briefs of amici curiae urging affirmance were filed for BayhDole25, Inc., by Stephen J. Marzen and Susan K. Finston; for the U. S. Philips Corp. et al. by John M. DiMatteo, Eugene Chang, Jack E. Haken, and Edward Blocker; and for the Wisconsin Alumni Research Foundation et al. by Richard G. Taranto, Munir R. Meghjee, and Anne M. Lockner.
Briefs of amici curiae were filed for the American Intellectual Property Law Association by Joseph R. Re and Irfan A. Lateef; for the Bar of the District of Columbia, Patent, Trademark & Copyright Section by David W. Long and Vandana Koelsch; for the Fédération Internationale des Conseils en Propriété Industrielle (FICPI) by John P. Sutton; for the Houston Intellectual Property Law Association by Albert B. Kimball, Jr., and Michael G. Locklar; and for Edward S. Lee by
JUSTICE GINSBURG delivered the opinion of the Court, except as to footnote 14.
It is the general rule under United States patent law that no infringement occurs when a patented product is made and sold in another country. There is an exception. Section 271(f) of the Patent Act,
AT&T holds a patent on an apparatus for digitally encoding and compressing recorded speech. Microsoft‘s Windows operating system, it is conceded, has the potential to infringe AT&T‘s patent, because Windows incorporates software code that, when installed, enables a computer to process speech in the
The master disk or electronic transmission Microsoft sends from the United States is never installed on any of the foreign-made computers in question. Instead, copies made abroad are used for installation. Because Microsoft does not export from the United States the copies actually installed, it does not “suppl[y] . . . from the United States” “components” of the relevant computers, and therefore is not liable under
Plausible arguments can be made for and against extending
I
Our decision some 35 years ago in Deepsouth Packing Co. v. Laitram Corp., 406 U. S. 518 (1972), a case about a shrimp deveining machine, led Congress to enact
Interpreting our patent law as then written, we reiterated in Deepsouth that it was “not an infringement to make or use a patented product outside of the United States.” Id., at 527; see
Laitram had argued in Deepsouth that resistance to extension of the patent privilege to cover exported parts “derived
from too narrow and technical an interpretation of the [Patent Act].” Id., at 529. Rejecting that argument, we referred to prior decisions holding that “a combination patent protects only against the operable assembly of the whole and not the manufacture of its parts.” Id., at 528. Congress’ codification of patent law, we said, signaled no intention to broaden the scope of the privilege. Id., at 530 (“When, as here, the Constitution is permissive, the sign of how far Congress has chosen to go can come only from Congress.“). And we again emphasized that
“[o]ur patent system makes no claim to extraterritorial effect; these acts of Congress do not, and were not intended to, operate beyond the limits of the United States; and we correspondingly reject the claims of others to such control over our markets.” Id., at 531 (quoting Brown v. Duchesne, 19 How. 183, 195 (1857)).
Absent “a clear congressional indication of intent,” we stated, courts had no warrant to stop the manufacture and sale of the parts of patented inventions for assembly and use abroad. 406 U. S., at 532.
Focusing its attention on Deepsouth, Congress enacted
supplying from the United States a patented invention‘s components:
“(1) Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.
“(2) Whoever without authority supplies or causes to be supplied in or from the United States any component of a patented invention that is especially made or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use, where such component is uncombined in whole or in part, knowing that such component is so made or adapted and intending that such component will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.”
35 U. S. C. § 271(f) .
II
Windows is designed, authored, and tested at Microsoft‘s Redmond, Washington, headquarters. Microsoft sells Windows
AT&T‘s patent (‘580 patent) is for an apparatus (as relevant here, a computer) capable of digitally encoding and compressing recorded speech. Windows, the parties agree, contains software that enables a computer to process speech in the manner claimed by the ‘580 patent. In 2001, AT&T filed an infringement suit in the United States District Court for the Southern District of New York, charging Microsoft with liability for domestic and foreign installations of Windows.
Neither Windows software (e. g., in a box on the shelf) nor a computer standing alone (i. e., without Windows installed) infringes AT&T‘s patent. Infringement occurs only when Windows is installed on a computer, thereby rendering it capable of performing as the patented speech processor. Microsoft stipulated that by installing Windows on its own computers during the software development process, it directly infringed the ‘580 patent.5 Microsoft further acknowledged that by licensing copies of Windows to manufacturers of computers sold in the United States, it induced infringement of AT&T‘s patent.6 Id., at 42a; Brief for Petitioner 3–4; Brief for Respondent 9, 19.
Microsoft denied, however, any liability based on the master disks and electronic transmissions it dispatched to foreign manufacturers, thus joining issue with AT&T. By sending Windows to foreign manufacturers, AT&T contended, Microsoft “supplie[d] . . . from the United States,”
for “combination” abroad, “components” of AT&T‘s patented speech processor; accordingly, AT&T urged, Microsoft was liable under
III
A
This case poses two questions: First, when, or in what form, does software qualify as a “component” under
As to the first question, no one in this litigation argues that software can never rank as a “component” under
themselves detached from any medium. (An analogy: The notes of Beethoven‘s Ninth Symphony.) One can alternatively envision a tangible “copy” of software, the instructions encoded on a medium such as a CD–ROM. (Sheet music for Beethoven‘s Ninth.) AT&T argues that software in the abstract, not simply a particular copy of software, qualifies as a “component” under
The significance of these diverse views becomes apparent when we turn to the second question: Were components of the foreign-made computers involved in this case “supplie[d]” by Microsoft “from the United States“? If the relevant components are the copies of Windows actually installed on the foreign computers, AT&T could not persuasively argue that those components, though generated abroad, were “supplie[d] . . . from the United States” as
States were not themselves installed abroad as working parts of the foreign computers.10
With this explanation of the relationship between the two questions in view, we further consider the twin inquiries.
First, when, or in what form, does software become a “component” under
Until it is expressed as a computer-readable “copy,” e. g., on a CD–ROM, Windows software—indeed any software detached from an activating medium—remains uncombinable. It cannot be inserted into a CD–ROM drive or downloaded from the Internet; it cannot be installed or executed on a computer. Abstract software code is an idea without physical embodiment, and as such, it does not match
be compared to a blueprint (or anything containing design information, e. g., a schematic, template, or prototype). A blueprint may contain precise instructions for the construction and combination of the components of a patented device, but it is not itself a combinable component of that device. AT&T and its amici do not suggest otherwise. Cf. Pellegrini v. Analog Devices, Inc., 375 F. 3d 1113, 1117–1119 (CA Fed. 2004) (transmission abroad of instructions for production of patented computer chips not covered by
AT&T urges that software, at least when expressed as machine-readable object code, is distinguishable from design information presented in a blueprint. Software, unlike a blueprint, is “modular“; it is a stand-alone product developed and marketed “for use on many different types of computer hardware and in conjunction with many other types of software.” Brief for Respondent 5; Tr. of Oral Arg. 46. Software‘s modularity persists even after installation; it can be updated or removed (deleted) without affecting the hardware on which it is installed. Ibid. Software, unlike a blueprint, is also “dynamic.” Ibid. After a device has been built according to a blueprint‘s instructions, the blueprint‘s work is done (as AT&T puts it, the blueprint‘s instructions have been “exhausted,” ibid.). Software‘s instructions, in contrast, are contained in and continuously performed by a computer. Brief for Respondent 27–28; Tr. of Oral Arg. 46. See also Eolas Technologies Inc. v. Microsoft Corp., 399 F. 3d 1325, 1339 (CA Fed. 2005) (“[S]oftware code . . . drives the functional nucleus of the finished computer product.” (quoting Imagexpo, L. L. C. v. Microsoft Corp., 299 F. Supp. 2d 550, 553 (ED Va. 2003))).
The distinctions advanced by AT&T do not persuade us to characterize software, uncoupled from a medium, as a combinable component. Blueprints too, or any design information for that matter, can be independently developed, bought, and sold. If the point of AT&T‘s argument is that we do not see blueprints lining stores’ shelves, the same observation may be made about software in the abstract:
Because it is so easy to encode software‘s instructions onto a medium that can be read by a computer, AT&T intimates, that extra step should not play a decisive role under
copy of Windows, not Windows in the abstract, qualifies as a “component” under
C
The next question, has Microsoft “supplie[d] . . . from the United States” components of the computers here involved? Under a conventional reading of
Judge Rader, dissenting, noted that “supplying” is ordinarily understood to mean an activity separate and distinct from any subsequent “copying, replicating, or reproducing—in effect manufacturing.” 414 F. 3d, at 1372–1373 (internal quotation marks omitted); see id., at 1373 (“[C]opying
ented invention without first making one hundred copies of the component. . . .“). He further observed: “The only true difference between making and supplying software components and physical components [of other patented inventions] is that copies of software components are easier to make and transport.” Id., at 1374. But nothing in
Section 271(f) prohibits the supply of components “from the United States . . . in such manner as to actively induce the combination of such components.”
is indeed easy and inexpensive. But the same could be said of other items: “Keys or machine parts might be copied from a master; chemical or biological substances might be created by reproduction; and paper products might be made by electronic copying and printing.” Brief for United States as Amicus Curiae 24. See also supra, at 451–452 (rejecting argument similarly based on ease of copying in construing “component“). Section 271(f) contains no instruction to gauge when duplication is easy and cheap enough to deem a copy in fact made abroad nevertheless “supplie[d] . . . from the United States.” The absence of anything addressing copying in the statutory text weighs against a judicial determination that replication abroad of a master dispatched from the United States “supplies” the foreign-made copies from the United States within the intendment of
Any doubt that Microsoft‘s conduct falls outside
with particular force in patent law. The traditional understanding that our patent law “operate[s] only domestically and d[oes] not extend to foreign activities,” Fisch & Allen 559, is embedded in the Patent Act itself, which provides that a patent confers exclusive rights in an invention within the United States.
As a principle of general application, moreover, we have stated that courts should “assume that legislators take account of the legitimate sovereign interests of other nations when they write American laws.” F. Hoffmann-La Roche Ltd v. Empagran S. A., 542 U. S. 155, 164 (2004); see EEOC v. Arabian American Oil Co., 499 U. S. 244, 248 (1991). Thus, the United States accurately conveyed in this case: “Foreign conduct is [generally] the domain of foreign law,” and in the area here involved, in particular, foreign law “may embody different policy judgments about the relative rights of inventors, competitors, and the public in patented inventions.” Brief for United States as Amicus Curiae 28. Applied to this case, the presumption tugs strongly against construction of
AT&T argues that the presumption is inapplicable because Congress enacted
AT&T alternately contends that the presumption holds no sway here given that
IV
AT&T urges that reading
from the United States. The Federal Circuit majority found AT&T‘s plea compelling:
“Were we to hold that Microsoft‘s supply by exportation of the master versions of the Windows® software—specifically for the purpose of foreign replication—avoids infringement, we would be subverting the remedial nature of § 271(f), permitting a technical avoidance of the statute by ignoring the advances in a field of technology—and its associated industry practices—that developed after the enactment of § 271(f). . . . Section 271(f), if it is to remain effective, must therefore be interpreted in a manner that is appropriate to the nature of the technology at issue.” 414 F. 3d, at 1371.
While the majority‘s concern is understandable, we are not persuaded that dynamic judicial interpretation of
There is no dispute, we note again, that
Section 271(f) was a direct response to a gap in our patent law revealed by this Court‘s Deepsouth decision. See supra, at 444, and n. 3. The facts of that case were undeniably at the fore when
Given that Congress did not home in on the loophole AT&T describes, and in view of the expanded extraterritorial thrust AT&T‘s reading of
Congress is doubtless aware of the ease with which software (and other electronic media) can be copied, and has not left the matter untouched. In 1998, Congress addressed “the ease with which pirates could copy and distribute a copyrightable work in digital form.” Universal City Studios, Inc. v. Corley, 273 F. 3d 429, 435 (CA2 2001). The resulting measure, the Digital Millennium Copyright Act,
the patent law is to be adjusted better “to account for the realities of software distribution,” 414 F. 3d, at 1370, the alteration should be made after focused legislative consideration, and not by the Judiciary forecasting Congress’ likely disposition.
* * *
For the reasons stated, the judgment of the Court of Appeals for the Federal Circuit is
Reversed.
THE CHIEF JUSTICE took no part in the consideration or decision of this case.
JUSTICE ALITO, with whom JUSTICE THOMAS and JUSTICE BREYER join, concurring as to all but footnote 14.
I agree with the Court that no “component[s]” of the foreign-made computers involved in this case were “supplie[d]” by Microsoft “from the United States.”
I
Computer programmers typically write programs in a “human readable” programming language. This “source code” is then generally converted by the computer into a “machine readable code” or “machine language” expressed in a binary format. Brief for Respondent 5, n. 1 (citing R. White, How Computers Work 87, 94 (8th ed. 2006)); E. Walters, Essential Guide to Computing 204–205 (2001). During the Windows writing process, the program exists in the form of machine readable code on the magnetic tape fields of Microsoft‘s computers’ hard drives.
When Microsoft finishes writing its Windows program in the United States, it encodes Windows onto CD–ROMs known as “golden master[s]” in the form of machine read- able code. App. 31, ¶ 4. This is done by engraving each disk in a specific way such that another computer can read the engravings, understand what they mean, and write the code onto the magnetic fields of its hard drive. Ibid.; Brief for Petitioner 4, n. 2.
Microsoft ships these disks (or sends the code via electronic transmission) abroad, where the code is copied onto other disks that are then placed into foreign-made computers for purposes of installing the Windows program. App. 31–32, ¶¶ 5–8. No physical aspect of a Windows CD–ROM—original disk or copy—is ever incorporated into the computer itself. See Stenograph L. L. C. v. Bossard Assocs., Inc., 144 F. 3d 96, 100 (CADC 1998) (noting that, within the context of the Copyright Act, “installation of software onto a computer results in ‘copying‘“); White, supra, at 144–145, 172–173. The intact CD–ROM is then removed and may be discarded without affecting the computer‘s implementation of the code.* The parties agree for purposes of this litigation that a foreign-made computer containing the Windows code would violate AT&T‘s patent if present in the United States. App. to Pet. for Cert. 42a, ¶ 5.
II
A
I agree with the Court that a component of a machine, whether a shrimp deveiner or a personal computer, must be something physical. Ante, at 449–452. This is because the word “component,” when concerning a physical device, is most naturally read to mean a physical part of the device. See Webster‘s Third New International Dictionary 466 (1976) (component is “constituent part: INGREDIENT“); Random House Dictionary of the English Language 301 (1967)
*In a sense, the whole process is akin to an author living prior to the existence of the printing press, who created a story in his mind, wrote a manuscript, and sent it to a scrivener, who in turn copied the story by hand into a blank book.
(component is “a component part; constituent“). Furthermore,
B
As the parties agree, an inventor can patent a machine that carries out a certain process, and a computer may constitute such a machine when it executes commands—given to it by code—that allow it to carry out that process. Such a computer would not become an infringing device until enough of the code is installed on the computer to allow it to execute the process in question. The computer would not be an infringing device prior to the installation, or even during the installation. And the computer remains an infringing device after the installation process because, even though the original installation device (such as a CD–ROM) has been removed
III
Here, Windows software originating in the United States was sent abroad, whether on a master disk or by means of an electronic transmission, and eventually copied onto the hard drives of the foreign-made computers. Once the copying process was completed, the Windows program was recorded in a physical form, i. e., in magnetic fields on the computers’ hard drives. See Brief for Respondent 5. The physical form of the Windows program on the master disk, i. e., the engravings on the CD–ROM, remained on the disk in a form unchanged by the copying process. See Brief for Petitioner 4, n. 2 (citing White, How Computers Work, at 144–145, 172–173). There is nothing in the record to suggest that any physical part of the disk became a physical part of the foreign-made computer, and such an occurrence would be contrary to the general workings of computers.
Because no physical object originating in the United States was combined with these computers, there was no violation of
* * *
Because the physical incarnation of code on the Windows CD–ROM supplied from the United States is not a “component” of an infringing device under
JUSTICE STEVENS, dissenting.
As the Court acknowledges, “[p]lausible arguments can be made for and against extending § 271(f) to the conduct charged in this case as infringing AT&T‘s patent.” Ante, at 442. Strong policy considerations, buttressed by the presumption against the application of domestic patent law in foreign markets, support Microsoft Corporation‘s position. I am, however, persuaded that an affirmance of the Court of Appeals’ judgment is more faithful to the intent of the Congress that enacted
The provision was a response to our decision in Deepsouth Packing Co. v. Laitram Corp., 406 U. S. 518 (1972), holding that a patent on a shrimp deveining machine had not been infringed by the export of components for assembly abroad. Paragraph (1) of
“Whoever without authority supplies or causes to be supplied in or from the United States any component of a patented invention that is especially made
or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use, where such component is uncombined in whole or in part, knowing that such component is so made or adapted and intending that such component will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.” § 271(f)(2) .
Under this provision, the export of a specially designed knife that has no use other than as a part of a patented deveining machine would constitute infringement. It follows that
The relevant component in this case is not a physical item like a knife. Both Microsoft and the Court think that means it cannot be a “component.” See ante, at 449. But if a disk
*“Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.”
with software inscribed on it is a “component,” I find it difficult to understand why the most important ingredient of that component is not also a component. Indeed, the master disk is the functional equivalent of a warehouse of components—components that Microsoft fully expects to be incorporated into foreign-manufactured computers. Put somewhat differently: On the Court‘s view, Microsoft could be liable under
I disagree with the Court‘s suggestion that because software is analogous to an abstract set of instructions, it cannot be regarded as a “component” within the meaning of
I would therefore affirm the judgment of the Court of Appeals.